Summary of Economic Projections

For release at 2:00 p.m., EDT, March 18, 2026 Summary of Economic Projections In conjunction with the Federal Open Market Committee (FOMC) meeting held on March 17–18, 2026, meeting participants submitted their projections of the most likely outcomes for real gross domestic product (GDP) growth, the unemployment rate, and inflation for each year from 2026 to 2028 and over the longer run. Each participant’s projections were based on information available at the time of the meeting, together with her or his assessment of appropriate monetary policy—including a path for the federal funds rate and its longer-run value—and assumptions about other factors likely to affect economic outcomes. The longer-run projections represent each participant’s assessment of the value to which each variable would be expected to converge, over time, under appropriate monetary policy and in the absence of further shocks to the economy. “Appropriate monetary policy” is defined as the future path of policy that each participant deems most likely to foster outcomes for economic activity and inflation that best satisfy his or her individual interpretation of the statutory mandate to promote maximum employment and price stability. Page 1 of 17 For release at 2:00 p.m., EDT, March 18, 2026 Table 1. Economic projections of Federal Reserve Board members and Federal Reserve Bank presidents, under their individual assumptions of projected appropriate monetary policy, March 2026 Percent Median1 CentralTendency2 Range3 Variable 2026 2027 2028 Longer 2026 2027 2028 Longer 2026 2027 2028 Longer run run run ChangeinrealGDP 2.4 2.3 2.1 2.0 2.2–2.5 2.0–2.4 2.0–2.3 1.8–2.0 2.1–2.7 2.0–2.7 1.8–2.7 1.7–2.5 Decemberprojection 2.3 2.0 1.9 1.8 2.1–2.5 1.9–2.3 1.8–2.1 1.8–2.0 2.0–2.6 1.8–2.6 1.7–2.6 1.7–2.5 Unemploymentrate 4.4 4.3 4.2 4.2 4.3–4.5 4.2–4.4 4.0–4.4 4.0–4.3 4.3–4.6 4.0–4.5 4.0–4.5 3.8–4.5 Decemberprojection 4.4 4.2 4.2 4.2 4.3–4.4 4.2–4.3 4.0–4.3 4.0–4.3 4.2–4.6 4.0–4.5 4.0–4.5 3.8–4.5 PCEinflation 2.7 2.2 2.0 2.0 2.6–3.1 2.0–2.3 2.0 2.0 2.3–3.3 1.8–2.4 1.9–2.2 2.0 Decemberprojection 2.4 2.1 2.0 2.0 2.3–2.5 2.0–2.2 2.0 2.0 2.2–2.7 2.0–2.3 2.0 2.0 CorePCEinflation4 2.7 2.2 2.0 2.5–2.8 2.0–2.4 2.0 2.2–3.0 2.0–2.5 2.0–2.2 Decemberprojection 2.5 2.1 2.0 2.4–2.6 2.0–2.2 2.0 2.2–2.7 2.0–2.5 2.0 Memo: Projected appropriatepolicypath Federalfundsrate 3.4 3.1 3.1 3.1 3.1–3.6 2.9–3.6 2.9–3.6 2.9–3.5 2.6–3.6 2.4–3.9 2.6–3.9 2.6–3.9 Decemberprojection 3.4 3.1 3.1 3.0 2.9–3.6 2.9–3.6 2.8–3.6 2.8–3.5 2.1–3.9 2.4–3.9 2.6–3.9 2.6–3.9 Note: Projectionsofchangeinrealgrossdomesticproduct(GDP)andprojectionsforbothmeasuresofinflationarepercentchangesfromthefourth quarter of the previous year to the fourth quarter of the year indicated. PCE inflation and core PCE inflation are the percentage rates of change in, respectively,thepriceindexforpersonalconsumptionexpenditures(PCE)andthepriceindexforPCEexcludingfoodandenergy. Projectionsforthe unemploymentratearefortheaveragecivilianunemploymentrateinthefourthquarteroftheyearindicated. Eachparticipant’sprojectionsarebasedon hisorherassessmentofappropriatemonetarypolicy. Longer-runprojectionsrepresenteachparticipant’sassessmentoftheratetowhicheachvariablewould beexpectedtoconvergeunderappropriatemonetarypolicyandintheabsenceoffurthershockstotheeconomy. Theprojectionsforthefederalfundsrate arethevalueofthemidpointoftheprojectedappropriatetargetrangeforthefederalfundsrateortheprojectedappropriatetargetlevelforthefederal fundsrateattheendofthespecifiedcalendaryearoroverthelongerrun. TheDecemberprojectionsweremadeinconjunctionwiththemeetingofthe FederalOpenMarketCommitteeonDecember9–10,2025. 1. Foreachperiod,themedianisthemiddleprojectionwhentheprojectionsarearrangedfromlowesttohighest. Whenthenumberofprojectionsis even,themedianistheaverageofthetwomiddleprojections. 2. Thecentraltendencyexcludesthethreehighestandthreelowestprojectionsforeachvariableineachyear. 3. Therangeforavariableinagivenyearincludesallparticipants’projections,fromlowesttohighest,forthatvariableinthatyear. 4. Longer-runprojectionsforcorePCEinflationarenotcollected. Page 2 of 17 For release at 2:00 p.m., EDT, March 18, 2026 Figure 1. Medians, central tendencies, and ranges of economic projections, 2026–28 and over the longer run Percent Change in real GDP 6 5 Actual 4 3 2 Median of projections 1 Central tendency 0 Range of projections 2021 2022 2023 2024 2025 2026 2027 2028 Longer run Percent Unemployment rate 7 6 5 4 3 2 1 2021 2022 2023 2024 2025 2026 2027 2028 Longer run Percent PCE inflation 7 6 5 4 3 2 1 2021 2022 2023 2024 2025 2026 2027 2028 Longer run Percent Core PCE inflation 7 6 5 4 3 2 1 2021 2022 2023 2024 2025 2026 2027 2028 Longer run Note: Definitionsofvariablesandotherexplanationsareinthenotestotable1. Thedatafortheactualvaluesof thevariablesareannual. Page 3 of 17 For release at 2:00 p.m., EDT, March 18, 2026 Figure 2. FOMC participants’ assessments of appropriate monetary policy: Midpoint of target range or target level for the federal funds rate Percent 6.0 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 2026 2027 2028 Longer run Note: Each shaded circle indicates the value (rounded to the nearest 1/8 percentage point) of an individual participant’sjudgmentofthemidpointoftheappropriatetargetrangeforthefederalfundsrateortheappropriate targetlevelforthefederalfundsrateattheendofthespecifiedcalendaryearoroverthelongerrun. Page 4 of 17 For release at 2:00 p.m., EDT, March 18, 2026 Figure3.A.Distributionofparticipants’projectionsforthechangeinrealGDP,2026–28andoverthelongerrun Number of Participants 2026 20 March projections December projections 18 16 14 12 10 8 6 4 2 1.4− 1.6− 1.8− 2.0− 2.2− 2.4− 2.6− 1.5 1.7 1.9 2.1 2.3 2.5 2.7 Percent range Number of Participants 2027 20 18 16 14 12 10 8 6 4 2 1.4− 1.6− 1.8− 2.0− 2.2− 2.4− 2.6− 1.5 1.7 1.9 2.1 2.3 2.5 2.7 Percent range Number of Participants 2028 20 18 16 14 12 10 8 6 4 2 1.4− 1.6− 1.8− 2.0− 2.2− 2.4− 2.6− 1.5 1.7 1.9 2.1 2.3 2.5 2.7 Percent range Number of Participants Longer run 20 18 16 14 12 10 8 6 4 2 1.4− 1.6− 1.8− 2.0− 2.2− 2.4− 2.6− 1.5 1.7 1.9 2.1 2.3 2.5 2.7 Percent range Note: Definitionsofvariablesandotherexplanationsareinthenotestotable1. Page 5 of 17 For release at 2:00 p.m., EDT, March 18, 2026 Figure3.B.Distributionofparticipants’projectionsfortheunemploymentrate,2026–28andoverthelongerrun Number of Participants 2026 20 March projections December projections 18 16 14 12 10 8 6 4 2 3.6− 3.8− 4.0− 4.2− 4.4− 4.6− 3.7 3.9 4.1 4.3 4.5 4.7 Percent range Number of Participants 2027 20 18 16 14 12 10 8 6 4 2 3.6− 3.8− 4.0− 4.2− 4.4− 4.6− 3.7 3.9 4.1 4.3 4.5 4.7 Percent range Number of Participants 2028 20 18 16 14 12 10 8 6 4 2 3.6− 3.8− 4.0− 4.2− 4.4− 4.6− 3.7 3.9 4.1 4.3 4.5 4.7 Percent range Number of Participants Longer run 20 18 16 14 12 10 8 6 4 2 3.6− 3.8− 4.0− 4.2− 4.4− 4.6− 3.7 3.9 4.1 4.3 4.5 4.7 Percent range Note: Definitionsofvariablesandotherexplanationsareinthenotestotable1. Page 6 of 17 For release at 2:00 p.m., EDT, March 18, 2026 Figure3.C.Distributionofparticipants’projectionsforPCEinflation,2026–28andoverthelongerrun Number of Participants 2026 20 March projections December projections 18 16 14 12 10 8 6 4 2 1.5− 1.7− 1.9− 2.1− 2.3− 2.5− 2.7− 2.9− 3.1− 3.3− 1.6 1.8 2.0 2.2 2.4 2.6 2.8 3.0 3.2 3.4 Percent range Number of Participants 2027 20 18 16 14 12 10 8 6 4 2 1.5− 1.7− 1.9− 2.1− 2.3− 2.5− 2.7− 2.9− 3.1− 3.3− 1.6 1.8 2.0 2.2 2.4 2.6 2.8 3.0 3.2 3.4 Percent range Number of Participants 2028 20 18 16 14 12 10 8 6 4 2 1.5− 1.7− 1.9− 2.1− 2.3− 2.5− 2.7− 2.9− 3.1− 3.3− 1.6 1.8 2.0 2.2 2.4 2.6 2.8 3.0 3.2 3.4 Percent range Number of Participants Longer run 20 18 16 14 12 10 8 6 4 2 1.5− 1.7− 1.9− 2.1− 2.3− 2.5− 2.7− 2.9− 3.1− 3.3− 1.6 1.8 2.0 2.2 2.4 2.6 2.8 3.0 3.2 3.4 Percent range Note: Definitionsofvariablesandotherexplanationsareinthenotestotable1. Page 7 of 17 For release at 2:00 p.m., EDT, March 18, 2026 Figure3.D.Distributionofparticipants’projectionsforcorePCEinflation,2026–28 Number of Participants 2026 20 March projections December projections 18 16 14 12 10 8 6 4 2 1.7− 1.9− 2.1− 2.3− 2.5− 2.7− 2.9− 1.8 2.0 2.2 2.4 2.6 2.8 3.0 Percent range Number of Participants 2027 20 18 16 14 12 10 8 6 4 2 1.7− 1.9− 2.1− 2.3− 2.5− 2.7− 2.9− 1.8 2.0 2.2 2.4 2.6 2.8 3.0 Percent range Number of Participants 2028 20 18 16 14 12 10 8 6 4 2 1.7− 1.9− 2.1− 2.3− 2.5− 2.7− 2.9− 1.8 2.0 2.2 2.4 2.6 2.8 3.0 Percent range Note: Definitionsofvariablesandotherexplanationsareinthenotestotable1. Page 8 of 17 For release at 2:00 p.m., EDT, March 18, 2026 Figure3.E.Distributionofparticipants’judgmentsofthemidpointoftheappropriatetargetrangeforthe federalfundsrateortheappropriatetargetlevelforthefederalfundsrate,2026–28andoverthelongerrun Number of Participants 2026 20 March projections December projections 18 16 14 12 10 8 6 4 2 1.88− 2.13− 2.38− 2.63− 2.88− 3.13− 3.38− 3.63− 3.88− 2.12 2.37 2.62 2.87 3.12 3.37 3.62 3.87 4.12 Percent range Number of Participants 2027 20 18 16 14 12 10 8 6 4 2 1.88− 2.13− 2.38− 2.63− 2.88− 3.13− 3.38− 3.63− 3.88− 2.12 2.37 2.62 2.87 3.12 3.37 3.62 3.87 4.12 Percent range Number of Participants 2028 20 18 16 14 12 10 8 6 4 2 1.88− 2.13− 2.38− 2.63− 2.88− 3.13− 3.38− 3.63− 3.88− 2.12 2.37 2.62 2.87 3.12 3.37 3.62 3.87 4.12 Percent range Number of Participants Longer run 20 18 16 14 12 10 8 6 4 2 1.88− 2.13− 2.38− 2.63− 2.88− 3.13− 3.38− 3.63− 3.88− 2.12 2.37 2.62 2.87 3.12 3.37 3.62 3.87 4.12 Percent range Note: Definitionsofvariablesandotherexplanationsareinthenotestotable1. Page 9 of 17 For release at 2:00 p.m., EDT, March 18, 2026 Figure 4.A. Uncertainty and risks in projections of GDP growth Median projection and confidence interval based on historical forecast errors Percent Change in real GDP 6 5 4 Actual 3 2 1 0 Median of projections −1 70% confidence interval 2021 2022 2023 2024 2025 2026 2027 2028 FOMC participants’ assessments of uncertainty and risks around their economic projections Number of Participants Number of Participants Uncertainty about GDP growth Risks to GDP growth 20 20 March projections 18 March projections 18 December projections 16 December projections 16 14 14 12 12 10 10 8 8 6 6 4 4 2 2 Lower Broadly Higher Weighted to Broadly Weighted to similar downside balanced upside Note: Theblueandredlinesinthetoppanelshowactualvaluesandmedianprojectedvalues,respectively,ofthe percent change in real gross domestic product (GDP) from the fourth quarter of the previous year to the fourth quarteroftheyearindicated. Theconfidenceintervalaroundthemedianprojectedvaluesisassumedtobesymmetric andisbasedonrootmeansquarederrorsofvariousprivateandgovernmentforecastsmadeovertheprevious20years; more information about these data is available in table 2. Because current conditions may differ from those that prevailed, onaverage, overtheprevious20years, thewidthandshapeoftheconfidenceintervalestimatedonthe basisofthehistoricalforecasterrorsmaynotreflectFOMCparticipants’currentassessmentsoftheuncertaintyand risks around their projections; these current assessments are summarized in the lower panels. Generally speaking, participantswhojudgetheuncertaintyabouttheirprojectionsas“broadlysimilar”totheaveragelevelsofthepast20 yearswouldviewthewidthoftheconfidenceintervalshowninthehistoricalfanchartaslargelyconsistentwiththeir assessmentsoftheuncertaintyabouttheirprojections. Likewise,participantswhojudgetheriskstotheirprojections as“broadlybalanced”wouldviewtheconfidenceintervalaroundtheirprojectionsasapproximatelysymmetric. For definitionsofuncertaintyandrisksineconomicprojections,seethebox“ForecastUncertainty.” Page 10 of 17 For release at 2:00 p.m., EDT, March 18, 2026 Figure 4.B. Uncertainty and risks in projections of the unemployment rate Median projection and confidence interval based on historical forecast errors Percent Unemployment rate 7 6 Actual 5 4 3 2 Median of projections 1 70% confidence interval 2021 2022 2023 2024 2025 2026 2027 2028 FOMC participants’ assessments of uncertainty and risks around their economic projections Number of Participants Number of Participants Uncertainty about the unemployment rate Risks to the unemployment rate 20 20 March projections 18 March projections 18 December projections 16 December projections 16 14 14 12 12 10 10 8 8 6 6 4 4 2 2 Lower Broadly Higher Weighted to Broadly Weighted to similar downside balanced upside Note: Theblueandredlinesinthetoppanelshowactualvaluesandmedianprojectedvalues,respectively,ofthe averagecivilianunemploymentrateinthefourthquarteroftheyearindicated. Theconfidenceintervalaroundthe medianprojectedvaluesisassumedtobesymmetricandisbasedonrootmeansquarederrorsofvariousprivateand government forecasts made over the previous 20 years; more information about these data is available in table 2. Becausecurrentconditionsmaydifferfromthosethatprevailed,onaverage,overtheprevious20years,thewidth andshapeoftheconfidenceintervalestimatedonthebasisofthehistoricalforecasterrorsmaynotreflectFOMC participants’currentassessmentsoftheuncertaintyandrisksaroundtheirprojections;thesecurrentassessmentsare summarizedinthelowerpanels. Generallyspeaking,participantswhojudgetheuncertaintyabouttheirprojectionsas “broadlysimilar”totheaveragelevelsofthepast20yearswouldviewthewidthoftheconfidenceintervalshowninthe historicalfanchartaslargelyconsistentwiththeirassessmentsoftheuncertaintyabouttheirprojections. Likewise, participantswhojudgetheriskstotheirprojectionsas“broadlybalanced”wouldviewtheconfidenceintervalaround theirprojectionsasapproximatelysymmetric. Fordefinitionsofuncertaintyandrisksineconomicprojections,seethe box“ForecastUncertainty.” Page 11 of 17 For release at 2:00 p.m., EDT, March 18, 2026 Figure 4.C. Uncertainty and risks in projections of PCE inflation Median projection and confidence interval based on historical forecast errors Percent PCE inflation 7 6 Actual 5 4 3 2 1 Median of projections 0 70% confidence interval 2021 2022 2023 2024 2025 2026 2027 2028 FOMC participants’ assessments of uncertainty and risks around their economic projections Number of Participants Number of Participants Uncertainty about PCE inflation Risks to PCE inflation 20 20 March projections 18 March projections 18 December projections 16 December projections 16 14 14 12 12 10 10 8 8 6 6 4 4 2 2 Lower Broadly Higher Weighted to Broadly Weighted to similar downside balanced upside Number of Participants Number of Participants Uncertainty about core PCE inflation Risks to core PCE inflation 20 20 March projections 18 March projections 18 December projections 16 December projections 16 14 14 12 12 10 10 8 8 6 6 4 4 2 2 Lower Broadly Higher Weighted to Broadly Weighted to similar downside balanced upside Note: Theblueandredlinesinthetoppanelshowactualvaluesandmedianprojectedvalues,respectively,of thepercentchangeinthepriceindexforpersonalconsumptionexpenditures(PCE)fromthefourthquarterofthe previousyeartothefourthquarteroftheyearindicated. Theconfidenceintervalaroundthemedianprojectedvalues isassumedtobesymmetricandisbasedonrootmeansquarederrorsofvariousprivateandgovernmentforecasts madeovertheprevious20years;moreinformationaboutthesedataisavailableintable2. Becausecurrentconditions maydifferfromthosethatprevailed,onaverage,overtheprevious20years,thewidthandshapeoftheconfidence intervalestimatedonthebasisofthehistoricalforecasterrorsmaynotreflectFOMCparticipants’currentassessments oftheuncertaintyandrisksaroundtheirprojections;thesecurrentassessmentsaresummarizedinthelowerpanels. Generallyspeaking,participantswhojudgetheuncertaintyabouttheirprojectionsas“broadlysimilar”totheaverage levelsofthepast20yearswouldviewthewidthoftheconfidenceintervalshowninthehistoricalfanchartaslargely consistentwiththeirassessmentsoftheuncertaintyabouttheirprojections. Likewise,participantswhojudgetherisks totheirprojectionsas“broadlybalanced”wouldviewtheconfidenceintervalaroundtheirprojectionsasapproximately symmetric. Fordefinitionsofuncertaintyandrisksineconomicprojections,seethebox“ForecastUncertainty.” Page 12 of 17 For release at 2:00 p.m., EDT, March 18, 2026 Figure 4.D. Diffusion indexes of participants’ uncertainty assessments Diffusion Index Change in real GDP 1.00 0.75 0.50 0.25 0.00 −0.25 −0.50 −0.75 −1.00 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Diffusion Index Unemployment rate 1.00 0.75 0.50 0.25 0.00 −0.25 −0.50 −0.75 −1.00 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Diffusion Index PCE inflation 1.00 0.75 0.50 0.25 0.00 −0.25 −0.50 −0.75 −1.00 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Diffusion Index Core PCE inflation 1.00 0.75 0.50 0.25 0.00 −0.25 −0.50 −0.75 −1.00 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Note: For each SEP, participants provided responses to the question “Please indicate your judgment of the uncertaintyattachedtoyourprojectionsrelativetothelevelsofuncertaintyoverthepast20years.” Eachpointinthe diffusionindexesrepresentsthenumberofparticipantswhoresponded“Higher”minusthenumberwhoresponded “Lower,”dividedbythetotalnumberofparticipants. FigureexcludesMarch2020whennoprojectionsweresubmitted. Page 13 of 17 For release at 2:00 p.m., EDT, March 18, 2026 Figure 4.E. Diffusion indexes of participants’ risk weightings Diffusion Index Change in real GDP 1.00 0.75 0.50 0.25 0.00 −0.25 −0.50 −0.75 −1.00 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Diffusion Index Unemployment rate 1.00 0.75 0.50 0.25 0.00 −0.25 −0.50 −0.75 −1.00 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Diffusion Index PCE inflation 1.00 0.75 0.50 0.25 0.00 −0.25 −0.50 −0.75 −1.00 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Diffusion Index Core PCE inflation 1.00 0.75 0.50 0.25 0.00 −0.25 −0.50 −0.75 −1.00 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Note: ForeachSEP,participantsprovidedresponsestothequestion“Pleaseindicateyourjudgmentoftherisk weightingaroundyourprojections.” Eachpointinthediffusionindexesrepresentsthenumberofparticipantswho responded“WeightedtotheUpside”minusthenumberwhoresponded“WeightedtotheDownside,”dividedbythe totalnumberofparticipants. FigureexcludesMarch2020whennoprojectionsweresubmitted. Page 14 of 17 For release at 2:00 p.m., EDT, March 18, 2026 Figure 5. Uncertainty and risks in projections of the federal funds rate Percent Federal funds rate Midpoint of target range 7 Median of projections 70% confidence interval* 6 5 4 3 2 Actual 1 0 2021 2022 2023 2024 2025 2026 2027 2028 Note: The blue and red lines are based on actual values and median projected values, respectively, of the Committee’stargetforthefederalfundsrateattheendoftheyearindicated. Theactualvaluesarethemidpointof thetargetrange;themedianprojectedvaluesarebasedoneitherthemidpointofthetargetrangeorthetargetlevel. Theconfidenceintervalaroundthemedianprojectedvaluesisbasedonrootmeansquarederrorsofvariousprivate andgovernmentforecastsmadeovertheprevious20years. Theconfidenceintervalisnotstrictlyconsistentwiththe projectionsforthefederalfundsrate,primarilybecausetheseprojectionsarenotforecastsofthelikeliestoutcomesfor thefederalfundsrate,butratherprojectionsofparticipants’individualassessmentsofappropriatemonetarypolicy. Still,historicalforecasterrorsprovideabroadsenseoftheuncertaintyaroundthefuturepathofthefederalfundsrate generatedbytheuncertaintyaboutthemacroeconomicvariablesaswellasadditionaladjustmentstomonetarypolicy thatmaybeappropriatetooffsettheeffectsofshockstotheeconomy. Theconfidenceintervalisassumedtobesymmetricexceptwhenitistruncatedatzero-thebottomofthelowest targetrangeforthefederalfundsratethathasbeenadoptedinthepastbytheCommittee. Thistruncationwould notbeintendedtoindicatethelikelihoodoftheuseofnegativeinterestratestoprovideadditionalmonetarypolicy accommodationifdoingsowasjudgedappropriate. Insuchsituations,theCommitteecouldalsoemployothertools, includingforwardguidanceandlarge-scaleassetpurchases,toprovideadditionalaccommodation. Becausecurrent conditionsmaydifferfromthosethatprevailed,onaverage,overtheprevious20years,thewidthandshapeofthe confidenceintervalestimatedonthebasisofthehistoricalforecasterrorsmaynotreflectFOMCparticipants’current assessmentsoftheuncertaintyandrisksaroundtheirprojections. *Theconfidenceintervalisderivedfromforecastsoftheaveragelevelofshort-terminterestratesinthefourth quarteroftheyearindicated;moreinformationaboutthesedataisavailableintable2. Theshadedareaencompasses lessthana70percentconfidenceintervaliftheconfidenceintervalhasbeentruncatedatzero. Page 15 of 17 For release at 2:00 p.m., EDT, March 18, 2026 Table 2. Average Historical Projection Error Ranges (Percentage points) Variable 2026 2027 2028 Change in real GDP1 .............. ± 1.5 ± 2.0 ± 2.2 Unemployment rate1 .............. ± 0.8 ± 1.4 ± 1.9 Total consumer prices2 ............ ± 1.4 ± 1.7 ± 1.8 Short-term interest rates3 ......... ± 0.9 ± 2.0 ± 2.5 Note: Errorrangesshownaremeasuredasplusorminustherootmeansquared errorofprojectionsfor2006through2025thatwerereleasedinthespringbyvarious privateandgovernmentforecasters. Asdescribedinthebox“ForecastUncertainty,” under certain assumptions, there is about a 70 percent probability that actual outcomesforrealGDP,unemployment,consumerprices,andthefederalfundsrate willbeinrangesimpliedbytheaveragesizeofprojectionerrorsmadeinthepast. Formoreinformation,seeDavidReifschneiderandPeterTulip(2017),“Gauging the Uncertainty of the Economic Outlook Using Historical Forecasting Errors: TheFederalReserve’sApproach,”FinanceandEconomicsDiscussionSeries2017- 020(Washington: BoardofGovernorsoftheFederalReserveSystem,February), https://dx.doi.org/10.17016/FEDS.2017.020. 1. Definitionsofvariablesareinthegeneralnotetotable1. 2. Measureistheoverallconsumerpriceindex,thepricemeasurethathasbeen mostwidelyusedingovernmentandprivateeconomicforecasts. Projectionsare percentchangesonafourthquartertofourthquarterbasis. 3. For Federal Reserve staff forecasts, measure is the federal funds rate. For otherforecasts,measureistherateon3-monthTreasurybills. Projectionerrorsare calculatedusingaveragelevels,inpercent,inthefourthquarter. Page 16 of 17 For release at 2:00 p.m., EDT, March 18, 2026 Forecast Uncertainty The economic projections provided by the members of tions are summarized in the bottom-left panels of those fig- the Board of Governors and the presidents of the Federal ures. Participants also provide judgments as to whether the Reserve Banks inform discussions of monetary policy among risks to their projections are weighted to the upside, are policymakers and can aid public understanding of the basis weighted to the downside, or are broadly balanced. That is, for policy actions. Considerable uncertainty attends these while the symmetric historical fan charts shown in the top projections, however. The economic and statistical models panels of figures 4.A through 4.C imply that the risks to par- and relationships used to help produce economic forecasts ticipants’ projections are balanced, participants may judge that are necessarily imperfect descriptions of the real world, and there is a greater risk that a given variable will be above rather the future path of the economy can be affected by myriad than below their projections. These judgments are summa- unforeseen developments and events. Thus, in setting the rized in the lower-right panels of figures 4.A through 4.C. stance of monetary policy, participants consider not only As with real activity and inflation, the outlook for the what appears to be the most likely economic outcome as em- future path of the federal funds rate is subject to considerable bodied in their projections, but also the range of alternative uncertainty. This uncertainty arises primarily because each possibilities, the likelihood of their occurring, and the poten- participant’s assessment of the appropriate stance of mone- tial costs to the economy should they occur. tary policy depends importantly on the evolution of real ac- Table 2 summarizes the average historical accuracy of a tivity and inflation over time. If economic conditions evolve range of forecasts, including those reported in past Monetary in an unexpected manner, then assessments of the appropri- Policy Reports and those prepared by the Federal Reserve ate setting of the federal funds rate would change from that Board’s staff in advance of meetings of the Federal Open point forward. The final line in table 2 shows the error ranges Market Committee (FOMC). The projection error ranges for forecasts of short-term interest rates. They suggest that shown in the table illustrate the considerable uncertainty as- the historical confidence intervals associated with projections sociated with economic forecasts. For example, suppose a of the federal funds rate are quite wide. It should be noted, participant projects that real gross domestic product (GDP) however, that these confidence intervals are not strictly con- and total consumer prices will rise steadily at annual rates of, sistent with the projections for the federal funds rate, as these respectively, 3 percent and 2 percent. If the uncertainty at- projections are not forecasts of the most likely quarterly out- tending those projections is similar to that experienced in the comes but rather are projections of participants’ individual as- past and the risks around the projections are broadly bal- sessments of appropriate monetary policy and are on an end- anced, the numbers reported in table 2 would imply a prob- of-year basis. However, the forecast errors should provide a ability of about 70 percent that actual GDP would expand sense of the uncertainty around the future path of the federal within a range of 1.5 to 4.5 percent in the current year, 1.0 to funds rate generated by the uncertainty about the macroeco- 5.0 percent in the second year, and 0.8 to 5.2 percent in the nomic variables as well as additional adjustments to monetary third year. The corresponding 70 percent confidence inter- policy that would be appropriate to offset the effects of vals for overall inflation would be 0.6 to 3.4 percent in the shocks to the economy. current year, 0.3 to 3.7 percent in the second year, and 0.2 to If at some point in the future the confidence interval 3.8 percent in the third year. Figures 4.A through 4.C illus- around the federal funds rate were to extend below zero, it trate these confidence bounds in “fan charts” that are sym- would be truncated at zero for purposes of the fan chart metric and centered on the medians of FOMC participants’ shown in figure 5; zero is the bottom of the lowest target projections for GDP growth, the unemployment rate, and range for the federal funds rate that has been adopted by the inflation. However, in some instances, the risks around the Committee in the past. This approach to the construction of projections may not be symmetric. In particular, the unem- the federal funds rate fan chart would be merely a convention; ployment rate cannot be negative; furthermore, the risks it would not have any implications for possible future policy around a particular projection might be tilted to either the decisions regarding the use of negative interest rates to pro- upside or the downside, in which case the corresponding fan vide additional monetary policy accommodation if doing so chart would be asymmetrically positioned around the median were appropriate. In such situations, the Committee could projection. also employ other tools, including forward guidance and asset Because current conditions may differ from those that purchases, to provide additional accommodation. prevailed, on average, over history, participants provide While figures 4.A through 4.C provide information on judgments as to whether the uncertainty attached to their the uncertainty around the economic projections, figure 1 projections of each economic variable is greater than, smaller provides information on the range of views across FOMC than, or broadly similar to typical levels of forecast uncer- participants. A comparison of figure 1 with figures 4.A tainty seen in the past 20 years, as presented in table 2 and through 4.C shows that the dispersion of the projections reflected in the widths of the confidence intervals shown in across participants is much smaller than the average forecast the top panels of figures 4.A through 4.C. Participants’ cur- errors over the past 20 years. rent assessments of the uncertainty surrounding their projec- Page 17 of 17

Federal Reserve (2026, March 17). Summary of Economic Projections. Sep, Federal Reserve. https://whenthefedspeaks.com/doc/sep_20260318

@misc{wtfs_sep_20260318,
  author = {Federal Reserve},
  title = {Summary of Economic Projections},
  year = {2026},
  month = {Mar},
  howpublished = {Sep, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/sep_20260318},
  note = {Retrieved via When the Fed Speaks corpus}
}